Cancer drug outlook prompts analyst to upgrade Bristol-Myers

By Russ Britt

The opinions of Wall Street analysts seem to be dominating Monday’s health-care stock news, so here’s one more recommendation from JPMorgan analyst Chris Schott, who gives a glowing account of Bristol-Myers Squibb Co.

Bloomberg

In a note to clients, Schott upped his rating on Bristol-Myers
/quotes/zigman/220498/quotes/nls/bmyBMY to overweight from neutral and hiked his price target to $52 a share from $50. Shares were up nearly 4% on the news to $45.23 in recent action.

Bristol’s development of its cancer drug, nivolumab, is part of what Schott says is the long-term attractiveness of the company, but the payoff could be substantial.

“While Bristol trades at a high multiple on near-term earnings [21 times 2014 estimates], we forecast a roughly 13% [annual earnings growth rate] for the company through 2020 with substantial potential upside to these estimates as we get additional clarity on the company’s pipeline,” Schott said in his note to clients.

He later added: “As a result, we see the Bristol story as almost completely about longer-term sales and earnings upside as compared to near-term [earnings per share].”

Story Conversation

About Health Exchange

Health Exchange guides investors to the crucial market intelligence they need to keep up with the health care industry, which makes up one-sixth of the U.S. economy. Anchored by Russ Britt, Health Exchange is the essential site for those looking for the most important news, data and analysis on the sector. You can reach Russ at Rbritt@marketwatch.com.